With confidence in the global economy improving and central banks beginning to shift their policy stance away from crisis-era stimulus, the dollar has suffered weeks of selling pressure, with the euro and pound the main winners.

The European single currency surged last week on the back of news that German Chancellor Angela Merkel was close to a coalition deal that will end months of uncertainty in the region's top economy.

And on Monday it almost broke $1.23 for the first time since December 2014 on strong economic data and after a key member of the European Central Bank hinted that it could start cutting back its bond-buying stimulus by September.

- Dollar struggles -

And despite uncertainty over Brexit, the pound is also sitting around levels against the dollar last touched in June 2016, when Britain voted to leave the European Union.

Stephen Innes, head of Asia-Pacific trading at OANDA, warned the greenback could face further selling.

"With the dollar trading 'three sheets to the wind' and 'wobbling like a drunken sailor', there is a stronger chance that panic dollar selling will ensue and hammer the dollar lower," he said.

The yuan extended Monday's advance that followed news Germany's central bank would include the Chinese currency in its own reserves, the latest step towards its internationalisation.

The currency is at a two-year high after Bundesbank board member Andreas Dombret's comments. The announcement follows the International Monetary Fund's decision in 2016 to include the yuan in its elite basket of currencies.

On oil markets Brent held above the $70 mark but was facing profit-taking pressure after recent gains, with dealers also concerned that Russia could review its role in an output freeze with OPEC owing to the improving prices.

Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers, said: "I believe there is still further short-term upside.

However, I think it's difficult to see prices going much higher from here.

"If we continue to hear the rhetoric of an end to production cuts, the free-for-all approach could see Brent and WTI tumbling back to the $50 level in the second half of 2018."

- Key figures around 0245 GMT -

Tokyo - Nikkei 225: UP 0.6 percent at 23,845.50 (break)

Hong Kong - Hang Seng: UP 0.8 percent at 31,590.21

Shanghai - Composite: UP 0.2 percent at 3,417.19

Euro/dollar: UP at $1.2266 from $1.2265 at 1635 GMT

Pound/dollar: DOWN at $1.3800 from $1.3806

Dollar/yen: UP at 110.80 yen from 110.56 yen

Oil - West Texas Intermediate: UP 24 cents at $64.54 per barrel

Oil - Brent North Sea: DOWN 22 cents at $70.04

London - FTSE 100: DOWN 0.1 percent at 7,769.14 (close) New York - DOW: Closed for public holiday